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Rebar price hike 'first of several'

MATERIALS Mills to introduce £20-per-tonne rise, further increase planned for September

STEEL reinforcement producers are to raise the price of rebar over the summer because of increasing input costs.

Mills will hit rebar fabricators with a £20-per-tonne rise this month and are understood to be planning to follow this with a similar price increase in September.

Fabricators will have no option but to pass on the price increases to concrete contractors and precast manufacturers from the date of the rise.

The scale of the hike reflects the increasing price of power, coal, iron ore and scrap steel, and f lies in the face of plunging prices recorded at the end of 2004 and into 2005.

Prices for cut and bent rebar hit a £400per-tonne high in September last year before falling back to current levels of approximately £300 per tonne.

This was due to panic buying amid rocketing scrap steel prices, according to one well placed industry source.

He claimed that companies stocked up on steel reinforcement during the last quarter of 2004 in a bid to stave off surging prices, but then producers Celsa and Alphasteel started producing close to capacity, leaving many contractors carrying too much steel into the winter period.

This, coupled with demand from India not being as strong as initially anticipated, led to the sharp drop in rebar prices.

India had been expected to be behind a massive hike in demand for steel in much the same way as China was during 2004.

Industry insiders are still predicting a surge in demand for rebar from India but are unsure when this will occur.

The fall in prices has been arrested during June and July with fabricators asking around £300 per tonne for their material.

And, although demand has been patchy there are some signs of an improvement in the sector.

Finbar r Lynch, chief executive at east London-based steel reinforcement fabricator Kierbeck, claimed that prices were merely stabilising at their natural level.

He said: 'Prices for cut and bent went up too high and have come back down too far and too quickly. Any price increases are just bringing it back to where it should have been anyway.' Demand for rebar had been relatively low over the first six months of the year, with orders down by 5 per cent, but is predicted to rise.

Mr Lynch said: 'Demand across the year is expected to be at approximately the same level as last year but what the sector really needs is for a big civil engineering project to start to give the industry a lift.'